Austin, Texas, is one of the fastest growing cities in the United States and the world. The government reports the total population of the city of Austin was 790,390 people in 2010, but by 2014 it had grown to 912,791. This is an increase of 12.5% in only four years. This exploding population brings with it all the problems that every large city experiences, from traffic to a decrease in services to a rise in property taxes. The property tax collected goes toward social services like welfare, emergency response services like police and fire rescue, new construction projects such as government buildings, and the maintenance of the overburdened water, power and transportation infrastructure of this new metropolis. Funding from property taxes even pay the salaries for government employees. Monthly mortgage payments will usually include a payment for the property tax of the home. On fully owned houses, these payments are made annually and in proportion to the tax payer’s property. This is known as an ad valorem tax. Austin property tax patterns are generally similar to other cities, like New York City, Chicago, and Portland, but how does Austin measure up when placed side by side these other cities? Is it cheaper or more expensive than America’s other rapidly growing cities?
What is the property tax in Austin, TX?
The state of Texas has no state property tax whatsoever. This lack of funding on the state level leaves local governments and taxing districts completely responsible for raising the funds they need from property taxes, and they must also determine what the property value will be assessed at. An appraiser will be sent to inspect and take a tally of taxable aspects of the property, then determine the taxable value. They will take factors into consideration such as the number of bedrooms, the amount of square footage available in the house, major remodeling jobs on any part of the property, and a wide variety of other factors. They will also consider the market value.
According to Austin property appraisers, all properties in Travis County will be assessed at full market value, rather than just the taxable aspects. Many other states set their state property tax by the taxable value, which tends to be a much lower number and slower to change. Property owners in Austin have no such protection. Their taxes are assessed according to the full market value of the property, which means that the burgeoning real estate market has raised the property taxes of every single person in the city.
The total property tax rate of Austin is computed by adding all applicable tax units, such as special district tax, city tax, county tax, school tax, and others. These will be added together to create the tax rate that will be applied to the value of your property.
This means that the property tax rate for Austin residents depends greatly on which section of Austin they reside in. North Austin residents experienced a tax rate of 0.3399 in 2014, with a minor, but unexpected dip to .31700 by 2015.
If you’re wondering how to apply these decimal tax rates, multiply the assessed property value by the tax rate of your area to get the dollar amount that must be paid annually. For instance, in 2015, a $120,000 home in North Austin would be $120,000 x .317000 = $3,804 annually, whereas in south Austin the value of that same home value would be multiplied by 0.0722. This would mean a yearly bill of $8,564.
How do property tax rates in New York City, New York compare to Austin, Texas?
Most other states with large cities, such as New York, have a set property tax rate, so that the value of your home is not taxed at full market value, resulting in a much smaller payment amount. It is taxed, rather, at the assessed value of the property, and at different rates, depending on which of the tax classes you fall into: residential home, condominium, utility, or industrial.
For residential homes the current tax rate in New York City is 19.554 %, an increase from the years 2012/13 by a substantial amount when it was a mere 18.569%. Back to our Austin example, a home whose market value is 120,000 may only be taxed on the assessed value, which in NYC is 6%. This is known as the Assessment Ratio. 6% of 120,000 market value is $7,200, which will be taxable potion of your property. So our new math problem for an NYC residential property with a market value of 120,000 is 7,200 x .19554 = $1,407.888 annually.
How does Chicago, Illinois measure up?
Chicago’s property taxes are much higher than Austin’s on average. Chicago’s property values are calculated based on a combination of assessed value and market value. The average tax rate for the city of Chicago was 6.81% in 2014 and is now an average of 8.5 % throughout the city. A residential home in the city of Chicago with a market value of $120,000 would pay .085 x 120,000 = $10,200 annually.
What can I expect form property tax rates in Portland, Oregon?
Portland, Oregon’s property tax rates are higher than some other states because there are no other state taxes to pick up the slack for budget spending, but even so, it is still on average cheaper than Austin. The value of a home is calculated solely on the assessment. This is somewhat more protected than Austin, Texas, as there is a constitution limit placed on how much assessed values are allowed to increase. This means that property taxes are not raised or lowered when a home sells for a higher or lower market value. It is entirely likely for a home to sell for $250,000 and still be taxed at an assessed value that is much lower. Measure 50 passed in 1998 making it illegal for assessed property value to increase more than 3% a year without a unanimous vote by the residents for schools, libraries, and fire service.
The city of Portland’s tax rates are also called “mill rates” and range from $15.00 to $20.30 per $1,000 of assessed property value. Back to our home example with a market value of $120,000. $120,000/$1,000 = $120 Annually, a much smaller number than what a residential homeowner would pay in Austin.
2 Point Highlight
“According to Austin property appraisers, all properties in Travis County will be assessed at full market value, rather than just the taxable aspects. Many other states set their state property tax by the taxable value, which tends to be a much lower number and slower to change.”
“The total property tax rate of Austin is computed by adding all applicable tax units, such as special district tax, city tax, county tax, school tax and others. These will be added together to create the tax rate that will be applied to the value of your property.
